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Bobby bought two shares of stock,

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me3raa
 Post subject: Bobby bought two shares of stock,
 Post Posted: Sun Mar 27, 2011 12:42 am 
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Course Students


Posts: 4
Bobby bought two shares of stock, which he sold for $96 each. If he had a profit of 20 percent on the sale of one of the shares but a loss of 20 percent on the sale of the other share, then on the sale of both shares combined Bobby had
a) a profit of $10
b) a profit of $8
c) a loss of $8
d) a loss of $10
e) neither a profit nor a loss
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david.khoy
 Post subject: Re: Bobby bought two shares of stock,
 Post Posted: Sun Mar 27, 2011 8:01 am 
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Students


Posts: 30
To solve this one, find the original price of each share.

Let's call x the original price of the share on which Bobby made a 20 percent profit. Bobby made a profit of 20 percent: he sold the share at the original price he bought it + 20 percent. Thus, the final price (96) is equal to x * 1.2:

1.2 x = 96
x = 96/1.2
x = 960/12
x = 2*2*3*80/2*2*3
x = 80
Bobby bought the share on which he made a profit for $80.
96 - 80 = 16
He made a profit of $16.

Now, let's call y the original price of the share on which Bobby had a loss of 20 percent. Selling the share with a loss of 20 percent means selling it at 80% of its original price:

0.8 y = 96
y = 96/0.8
y = 960/8
y = 2*2*2*120/2*2*2
y = 120
Bobby bought the share on which he lost 20% for $120.
96 - 120 = -24
He lost $24.

On the sales of both shares combined:
16 - 24 = -8
Bobby had a loss of $8. Answer C is correct.
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me3raa
 Post subject: Re: Bobby bought two shares of stock,
 Post Posted: Sun Mar 27, 2011 12:58 pm 
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Course Students


Posts: 4
Thanks so much, your explanation is very clear!
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david.khoy
 Post subject: Re: Bobby bought two shares of stock,
 Post Posted: Sun Mar 27, 2011 1:22 pm 
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Students


Posts: 30
You're welcome.
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RonPurewal
 Post subject: Re: Bobby bought two shares of stock,
 Post Posted: Wed Mar 30, 2011 3:19 am 
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ManhattanGMAT Staff


Posts: 7146
nicely done
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